One headline today read “Toyota woes follow years of slipping quality. Giant automaker ramped up quickly to become world’s leader. The complacency that brought General Motors, Ford and Chrysler to their knees seems to have infected Toyota, too.”
What’s unique and worth pondering about Toyota’s case is that this Japanese automaker pioneered the most widely followed methodology for process optimization - Lean Production, or simply Lean. This methodology focuses on eliminating waste from a process and adding velocity at the same time. Most companies combine Lean with Six Sigma, which focuses on reduction in error rates, to achieve processes for both products and service, that are efficient in time and cost and are effective.
As a pioneer of Lean, one would expect Toyota as an organization to know that processes deteriorate over time. This is a redult of several factors that include business environment, technology, people, and industry participants. Keeping the processes performing at optimum levels requires periodic benchmarking and tuning. In its effort to grow aggressively, Toyota seems to have taken its eyes off the ball, so to speak. It seems to have neglected investing in its very processes that earned it its distinguishing reputation for quality. Hard dollar estimates of loss from the recalls to Toyota are current in the billions of dollars, not to mention many years it will take the automaker to recover from the softer damages to its reputation that would translate into hard dollars.
As business leaders and managers, we can learn a very basic but important lesson from this – “don’t forget to sharpen the saw”. Meaning that keeping and eye on and investing in the back office processes through which the cash flows of the business pass, is critical to the health of the business. Trying to save costs by not investing in these back office processes will sooner or later cost a lot more – even the business itself.